Ernie Banks eyes bid for Chicago Cubs

Mr. Cub, investors show interest in team; but are they for sale?

Steven R. Strahler

(Crain's) -- Ernie Banks wants to buy the Chicago Cubs and said so during a half-hour meeting last month with Dennis FitzSimons, the embattled CEO of team owner Tribune Co.
Mr. FitzSimons gently rebuffed the most famous name in Cubs history, repeating the company line that the team isn't for sale, Mr. Banks says. But that stance could soon change.
Prospects for divestiture of the Cubs have suddenly shifted since Mr. Banks visited Tribune Tower on May 23.
The company's second-biggest shareholder, opposing a stock buyback plan that Mr. FitzSimons hopes will boost the company's lagging share price, could force more drastic action, including asset sales or a breakup of the media conglomerate.
"Of course I would be interested if the team was for sale," says the exuberant Mr. Banks, 75, who retired in 1971 after hitting a team record 512 home runs.
He says two groups have approached him about participating in a bid: Giuliani Partners LLC, headed by former New York Mayor Rudolph Giuliani, and Los Angeles-based buyout firm Comstock Capital Partners LLC.
Mr. Banks says discussions didn't cover what, if any, financial backing he would provide or what stake he would

(Crain's) -- Ernie Banks wants to buy the Chicago Cubs and said so during a half-hour meeting last month with Dennis FitzSimons, the embattled CEO of team owner Tribune Co.

(Crain's) -- Ernie Banks wants to buy the Chicago Cubs and said so during a half-hour meeting last month with Dennis FitzSimons, the embattled CEO of team owner Tribune Co.

Mr. FitzSimons gently rebuffed the most famous name in Cubs history, repeating the company line that the team isn't for sale, Mr. Banks says. But that stance could soon change.

Prospects for divestiture of the Cubs have suddenly shifted since Mr. Banks visited Tribune Tower on May 23.

The company's second-biggest shareholder, opposing a stock buyback plan that Mr. FitzSimons hopes will boost the company's lagging share price, could force more drastic action, including asset sales or a breakup of the media conglomerate.

"Of course I would be interested if the team was for sale," says the exuberant Mr. Banks, 75, who retired in 1971 after hitting a team record 512 home runs.

He says two groups have approached him about participating in a bid: Giuliani Partners LLC, headed by former New York Mayor Rudolph Giuliani, and Los Angeles-based buyout firm Comstock Capital Partners LLC.

Mr. Banks says discussions didn't cover what, if any, financial backing he would provide or what stake he would have in the team.

The Cubs could be expected to fetch at least $500 million, according to recent estimates. The Tribune bought the team in 1981 for $20.5 million.

Mr. Banks would lend star power to any buyout offer. He already serves as a Cubs ambassador at games and other team events.

Yale Gordon, a marketer who works with Mr. Banks, says he told him, "You are Mr. Cub. You would be a great frontman for anyone."

Mr. Banks' name recognition in the Chicago area, even among those too young to have seen him play, is above 80%, according to a survey by the Lake Forest Graduate School of Management last year. Among respondents earning $75,000 or more annually, the figure tops 90%.

TEAM FOR SALE?

If Tribune is broken up, it's unclear whether the Cubs would be included in any sale or spin-off of the company assets. One of Tribune's arguments for owning the team has been that it provides free content to WGN-TV. That synergy has diminished in recent years as fewer games are aired on the station.

A separate sale of the Cubs could bring Tribune shareholders more cash than they would net as part of a broadcast package, and Mr. Banks and his backers would surely face competing bidders if the team is auctioned.

'TROPHY PROPERTY'

"It's a trophy property with a scarcity value," says John Rogers, CEO of Ariel Capital Management LLC, the Tribune's sixth-largest investor, with 10.3 million shares.

After seeing the company's stock lose almost half its value in the past two years, Tribune officials late last month said that the company would repurchase up to 25% of the shares at prices between $28 and $32.50--far below a breakup value estimated in the mid-$40s by Ariel and Wall Street firms.

The announcement of the buyback, which could add $2 billion in debt to the Tribune's balance sheet, helped reverse the stock slide. So did disclosure last week by the Wall Street Journal of a regulatory filing that noted opposition to the buyback from three directors representing the Chandler Family trusts--which received a 12.2% stake in Tribune as a result of the 2000 sale of Los Angeles-based Times Mirror Co.

Investors are betting that Tribune management will be forced to reconsider what is and what isn't for sale. The shares closed Friday at $31.96, near the high end of the Tribune's purchase offer.

"There's just too much pressure for them not to do something at this point," says Chris Browne, whose New York-based Tweedy Browne Co. owns 1 million Tribune shares.